Charles Schwab Corporation (NYSE:SCHW) is a favorite among institutional investors who own 72%

On December 27, 2024By Littum

The institutes’ significant holdings in Charles Schwab mean that they have considerable influence on the company’s share price
A total of 16 investors have a majority stake in the company with 50% ownership
Insiders have been selling lately

Any investor in The Charles Schwab Corporation (NYSE:SCHW) should be aware of the most powerful shareholder groups. And the group that has the largest share of the pie is institutions with 72% ownership. In other words, the group stands to gain the most (or lose the most) from their investment in the company.

Given the vast amounts of money and research capacity at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. Therefore, a good chunk of institutional money invested in the company is usually a huge vote of confidence in its future.

Let’s dive deeper into each type of owner of Charles Schwab, starting with the chart below.

See our latest analysis for Charles Schwab

ownership distribution — NYSE:SCHW Ownership Distribution December 27, 2024

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a nice chunk of Charles Schwab. This may indicate that the company has some level of credibility in the investment community. However, it is best to be cautious about relying on the supposed validation that comes with institutional investors. They are also wrong sometimes. It is not uncommon to see a large share price drop if two large institutional investors try to sell off a stock at the same time. So it’s worth checking the past earnings trajectory of Charles Schwab, (below). Of course, keep in mind that there are other factors to consider as well.

earnings and revenue growth — NYSE:SCHW Earnings and Revenue Growth Dec 27, 2024

Investors should note that institutions actually own more than half of the company, so they can collectively wield significant power. We note that hedge funds do not have a meaningful investment in Charles Schwab. Our data shows that Toronto-Dominion Bank is the largest shareholder with 10% of outstanding shares. Meanwhile, the second-largest and third-largest shareholders own 7.0% and 5.7% of the outstanding shares, respectively.

A closer look at our ownership numbers suggests that the 16 largest shareholders have a combined ownership of 50%, meaning that no single shareholder has a majority.

While studying institutional ownership of a company can add value to your research, it’s also good practice to examine analyst recommendations to gain a deeper understanding of a stock’s expected performance. There are a fair number of analysts covering the stock, so it can be helpful to find out their overall view on the future.

The definition of company insiders can be subjective and varies between jurisdictions. Our data reflects individual insiders, capturing at least board members. The company’s management runs the business, but the CEO will answer to the board, even if he or she is a member of it.

Insider ownership is positive when it signals that management thinks like the company’s true owners. However, high insider ownership can also give enormous power to a small group within the company. This can be negative in some cases.

We can report that insiders own shares of The Charles Schwab Corporation. The insiders have a meaningful stake worth USD 2.0 billion. we sometimes take an interest in whether they have bought or sold.

The general public – including retail investors – owns 12% of the shares in the company and therefore cannot be easily ignored. Although this size of ownership may not be enough to influence a policy decision in their favor, they can still have a collective influence on company policies.

It appears that private companies own 4.3% of Charles Schwab stock. Private companies can be related parties. Sometimes insiders have an interest in a public company through an ownership interest in a private company, rather than in their own capacity as an individual. Although it is difficult to draw any broad conclusions, it is worth noting as an area for further research.

We can see that public companies own 10% of Charles Schwab stock. We cannot be sure, but it is very possible that this is a strategic effort. The companies may be similar or work together.

While it is worth considering the different groups that own a business, there are other factors that are even more important. For example, consider risks. All companies have them and we have seen them 1 warning sign for Charles Schwab you should know about.

If you’re like me, you may be considering whether this business will grow or shrink. Fortunately, you can check this free report showing analysts’ forecasts for the future.

NB: The figures in this article are calculated from data from the last 12 months, which refers to the 12-month period ending on the last date of the month in which the annual accounts are dated. This may not be consistent with the annual report for the full year.

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This article by Simply Wall St is general. We only provide commentary based on historical data and analyst forecasts using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any shares and does not take into account your goals or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not take into account recent price-sensitive company announcements or qualitative material. Simply Wall St has no position in any listed stocks.